Automatic Depreciation Entries are Getting Created on Expired DF Lease Contracts in Error
(Doc ID 1319279.1)
Last updated on JANUARY 04, 2021
Applies to:Oracle Lease and Finance Management - Version 12.1.1 and later
Information in this document applies to any platform.
On : 12.1.1 version, Asset Management,
All direct finance lease contracts with Effective To Dates on last day of month are causing automatic depreciation entries in R12 once they expire. In R12, user is unable to prevent depreciation as SLA has two Line Types that are automatically creating the depreciation entries upon expiration. The Line Types are Adjustment Depreciation Expense and Depreciation Catchup Expense Account for Adjustment.
The off-lease amortization periods cannot be used to prevent depreciation as their operating leases and direct finance leases share same asset category, and operating leases should have depreciation entries but direct finance leases should not.
In R11, users could uncheck the depreciate box after expiration to prevent depreciation on these contracts but not in R12.
Expect not to have depreciation entries for DF Leases in these scenarios.
The issue can be reproduced at will with the following steps:
1. Run terminate expire contracts program on a direct finance lease (where residual>0) with expiration date being last date of previous month (period closed in FA module).
2. Run process transactions in fixed asset job to move residual amount into FA module.
3. Asset is automatically added to FA and depreciated with Adjustment entry (in R11 depreciation entry could be prevented but in R12 it cannot as it posts as a catchup entry).
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